Congress Needs to Resolve Banking Tension Related to Legal Marijuana

As reported by Reuters, San Francisco Fed President sees “unsustainable tension” on banks as the conflict builds between cannabis being legal in some fashion in half of the U.S. states, yet illegal at the federal level. Following a speech to The Hayek Group in Reno, Nevada on Tuesday, where Williams focused on monetary policy, Reuters quoted the SF bank president as describing the situation as a “big issue for this country” and one that needs to be resolved by Congress.

The problem is that marijuana remains a Schedule I drug under the Controlled Substance Act, alongside drugs like heroin and LSD, which puts banks is an extremely precarious position in touching any money that is derived even from legal cannabis sales on the state level, albeit for medicinal and recreational purposes. This leaves legal cannabis companies with limited banking options, forcing all-cash transactions and building cash hoards that could make them targets for criminals.

In August, the Drug Enforcement Agency shot down efforts to reclassify marijuana outside Schedule I, the most restrictive category designated for highly addictive drugs that are susceptible for abuse. In rendering the decision to deny reclassification, DEA chief Chuck Rosenberg again leaned upon a lack of clinical research and conclusions of the U.S. Food and Drug Administration the marijuana has no safe and effective medical use at this point.

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